As the debate continues on wether the economy will fall into a recession or it will experience a soft landing, mostly because the definitions are too vague, some numbers continue to point towards weakening. Leading indicators, published by the conference board, have been falling for 18 consecutive months, which in itself should be enough to declare a recession, if it wasn’t because in this instance, unemployment hasn’t increased yet. Unlike other episodes in the past, the zero interest rate period we just experienced, has allowed companies to be more resilient, simply because they have secured a low cost of funds on their balance sheets. But the environment is deteriorating, revenues are coming on the low side, and layoffs, which were concentrated on the tech sector a year ago, are now being considered everywhere. The dissonance between the equity markets and the economy needs to sync, one way or another.
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